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The Truth Behind Invoice Card Payments

Ralph Perdomo

"There are some things money can't buy..."

"Everywhere you want to be."

"Don't leave home without it."

You probably recognize those slogans; they're the ones used by Mastercard, Visa, and American Express. While the hallmark of a good slogan is one that sticks to your head, its job doesn't end there. The corporate ad types know for a slogan to be successful it needs to do much more than just stick in your mind—it needs to change behavior.

And change it has.

behind the scenes with credit card invoice payments for b2b payable payments Created by Ryan Mason

A recent figure from the Federal Reserve's Consumer Credit report pegs overall revolving credit card balances at just shy of $1 trillion—that's certainly a lot in our wallets. Compare this figure to the $526 billion we carried back in 1997 (the same year Mastercard began its 'Priceless' campaign), and we quickly see our appetite for plastic is only increasing.

But it's not just consumers whose taste for credit cards is insatiable.

Businesses, too, are realizing the benefits of using card—from increased cash flow to earning cash back and other rewards. They're even making more of their invoice payments this way too, capturing even more of these benefits.

It's this latter type of electronic payment—invoice payment made through a virtual card—that's at the core of Nvoicepay's payment optimization technology. The more suppliers Nvoicepay enables for card payments, the more invoices will be paid by virtual card, equaling more rebates for the customer. For Nvoicepay to "win," our customers have to "win" first, creating a true "win-win" situation delivering measurable business value.

It's this win-win-win that makes our solution so successful.

To understand the dynamics at play in this mutually beneficial relationship, it helps to explore how credit card networks work.

Behind the scenes

At one side is the card network or association. This is your Mastercard, Visa, Discover, and American Express. Next, there's the issuing bank—your Chase, Wells Fargo, Bank of America, to name a few. Credit card networks rely on the issuing banks to back the loans of the transaction.

On the other side are the merchant or acquiring banks. These are the mostly unknown-to-consumers organizations behind the scenes—First Data, Chase, and Vantiv, to name a few. Acquiring banks serve as intermediaries accepting funds from the cardholder, to later transfer those into the merchant's bank.

The overlap that exists between the two is called the interchange. Depending on the type or method of the transaction—can vary greatly. In the case of the Standard rate, it's 2.95% of the transaction size along with a 10 cent transaction charge.

The card networks set the interchange rates and much like taxes, interchange rates must be paid. According to Mastercard, these rates are set very competitively:

"Setting interchange rates at the appropriate level also helps ensure that both issuers and acquirers deliver services that optimize the effectiveness of the payments system and spur development of innovative payment solutions." [emphasis added]

It's these very same, competitively set interchange rates that allow Nvoicepay to be one of those innovative credit card payment services.

behind the scenes and center stage with invoice card payments

Center stage

We're not the only ones to inhabit the interchange stage. Here, too, you'll find consumer cash-back bonuses, frequent flyer miles, and other perks and rebates.

It's easy to understand why businesses and organizations choose Nvoicepay when looking for electronic payments that include invoice card payments. Take Swinerton Builders for example; they earned over $1 million dollars in rebates in less than a year, just by paying their typical invoices through Nvoicepay.

But the most significant benefit to you comes from Nvoicepay's ongoing effort of looking for more suppliers to pay by card. We call this vendor enablement—an integral part of payment optimization. With payment optimization, we reach out to your suppliers with a simple question: "What type of electronic payment are you willing to accept?" You may be surprised to learn that your suppliers want to accept electronic payments, even by card.

Suppliers willing to accept invoice card payments are fast-tracked into receiving it. And for those who can't? Well, it's business as usual. They'll continue receiving payment through ACH or print check.

Although we both have a shared interest in paying as many suppliers by card, we understand that lasting relationships are a lot more important than a few dollars back. That's why we never press the card payment issue with unwilling suppliers.

We don't need to. More and more businesses are reaping the time and cost savings of accepting invoice card payment.

Maybe, then, it's time for us to try on a new slogan: "Don't just pay invoices. Nvoicepay them."

 

Swinerton pays suppliers by virtual credit card